Homeland Security Spending Could Drive This Canadian Stock

By Mitchell Clark, B.Comm. Published : May 31, 2007

I recently came across a small Canadian company whose products just intrigue me. Still at an early stage of development and a light trader on the Toronto Stock Exchange, Extreme CCTV Incorporated (TSX/EXC) specializes in designing and manufacturing advanced infrared illuminators and high-end video surveillance products.

Most of the company’s products allow continual surveillance, illuminating any potential movements and recording all in the dark. The company was founded in 1997 in Burnaby, British Columbia, with specific engineering expertise in what is known as “active infrared-imaging” and “extreme application surveillance.”

One of the company’s products, the “Moondance PowerDome PTZ Camera” is designed to withstand extreme exposure to water and salt. This product was just tested using the full force of a high- pressure fire engine hose, trying to simulate harsh weather the camera might experience on a bridge or in coastal surveillance applications. Another rugged camera system the company manufactures is designed to monitor volcanic eruptions.

In its most recent quarter, the second fiscal quarter ended March 31, 2007, the company reported revenues hit a record high of $12.2 million, representing growth of over 93% over the comparable period (all figures are reported in Canadian dollars).

Net income for the second quarter was $920,000, or $0.05 per diluted share, as compared to $417,000, or $0.02 per diluted share, last year.

This company is still very small and its stock isn’t very liquid, but I’m still interested in this company because its products are so innovative. I feel that the timing is right for a company like this to really become a success. Homeland Security dollars are being spent on Extreme CCTV’s products, and this can only bode well for the stock.

It’s early in this company’s development as a public company trading on a stock exchange, but I think this company has the potential to do very well over the coming years. Keep an eye on this one!